Use the data in RENTAL.RAW for this exercise. The data on rental prices and other variables for
Question:
where pop is city population, avginc is average income, and pctstu is student population as a percentage of city population (during the school year).
(i) Estimate the equation by pooled OLS and report the results in standard form. What do you make of the estimate on the 1990 dummy variable? What do you get for pctsu?
(ii) Are the standard errors you report in part (i) valid? Explain.
(iii) Now, difference the equation and estimate by OLS. Compare your estimate of βpctsu whit mat from Part Does the relative size of the student population appear to affect rental prices?
(iv) Estimate the model by fixed effects to verify that you get identical estimates and standard errors to those in part (iii).
Step by Step Answer:
Introductory Econometrics A Modern Approach
ISBN: 978-0324660548
4th edition
Authors: Jeffrey M. Wooldridge